Which of the following would describe a callable bond?
A) Borrower has the right to pay off the bonds prior to due date.
B) Borrower has the right to issue more bonds prior to due date.
C) Borrower has the right to call off the interest payments on the bonds.
D) Investor has the right to call off the interest payments on the bonds.

Question

Quizplus · Accepted Answer

A callable bond gives the borrower the right to call the bonds prior to their stated maturity date, which means they can pay off the bonds early. This gives the borrower flexibility and may be beneficial if interest rates decline, allowing them to refinance at a lower rate.

Which of the Following Would Describe a Callable Bond